6m ago03:15
ING: Expect negative GDP in April after free Covid tests are scrapped
UK growth slowed in February as falling healthcare spending offset recoveries as Omicron restrictions were lifted, says James Knightly from ING:
First — and not so surprisingly — consumer services saw a strong rebound in what was truly the first month of “business as usual” following Omicron. Most of the Covid-19 restrictions (including work-from-home guidelines) have been lifted, and card spending in social venues has returned to comparable pre-virus levels. Both hospitality and arts/entertainment/recreation rebounded nearly 9% compared to January – led by tourism sectors, according to the ONS.
Healthcare spending, which fell by almost 5%, worked in the opposite direction. This category has been driven almost entirely by fluctuations in Covid testing levels and vaccine activity over the past year. In fact, even accounting for the recent contraction, monthly GDP is still over 1% higher than it would have been if healthcare spending had hypothetically remained flat during the pandemic.
Photo: ING
Healthcare spending is likely to be the main driver of these GDP numbers over the next few months, Knightley adds:
This is particularly true for the April figures, as the NHS ended free mass testing for the general public at the end of March. In other words, expect a negative GDP number for April.
14 mins ago03:07
That NHS Test and Trace and covid-19 The vaccination program slashed Britain’s gross domestic product (GDP) growth by 1.1 percentage points in February, ONS reports:
This was caused by sharp declines in both NHS Test and Trace (down 47%) and vaccination programs (down 65%).
However, it is important to note that this is due to a particularly high level of activity in December and January, reflecting Omicron’s vaccination booster campaign and high infection rates.
UK GDP: February 2022 Photo: ONS
economist Samuel graves from Pantheon macroeconomics says healthcare spending could fall further for a few months:
Expect more weak month-on-month GDP growth data in the coming months; Production in the healthcare sector has to fall much further…
— Samuel Tombs (@samueltombs) April 11, 2022 27 minutes ago02:54
Alpesh Paleja, CBI To lead The economist warns the government is not doing enough to help businesses cope with the pressure on the cost of living and the disruption caused by the war in Ukraine.
“After the rebound earlier in the year, it is not surprising that economic growth slowed in February. Near-term challenges to the outlook have since increased as a deepening cost-of-living crisis will weigh on growth.
“Companies are also grappling with headwinds from the Ukraine conflict, which is compounding cost pressures and supply chain disruption.
“It is clear that the momentum for growth is still underwhelming. While the government took some steps in the spring statement to keep confidence in our economy, they are not doing enough to address the current challenges facing businesses.
“The only sustainable answer is a relentless campaign for economic growth and productivity through measures such as capital allowances, R&D reforms and a revised apprenticeship levy.”
29 mins ago02:52
The UK is entering a “prolonged phase” of much weaker growth as the cost of living crisis hits the economy, warns For sure ThiruHead of the Economics Department British chambers from Trade.
“While economic output continued to recover in February, the sharp slowdown in growth suggests that the UK economy was already losing steam before the impact of the Russian invasion of Ukraine.
“Tourism-related industries and lodging businesses saw the strongest improvements for the month as the end of Plan B restrictions and reduced concerns about Omicron supported activity. However, this was largely offset by a significant drop in NHS test and trace services and vaccines activity, as well as falls in industrial and construction output.
“The February slowdown is likely to mark the start of an extended period of significantly weaker growth as rising inflation, rising energy bills and higher taxes increasingly damage key drivers of UK manufacturing, including consumer spending and business investment.
31 mins ago02:50
GDP: the main charts
UK GDP, February 2022 Photo: ONS
UK GDP to February 2022 Photo: ONS
UK GDP February Photo: ONS 39m ago02:42
Darren Morgan, Director of Economic Statistics for the USsays UK manufacturing output fell “remarkably” in February as companies continued to struggle to source parts.
But the easing of travel restrictions has boosted the travel sector, Morgan explains.
Commenting on today’s GDP figures, ONS Director of Economic Statistics Darren Morgan said: (1/3)
⬇️ pic.twitter.com/0SnNyFbRNO
— Office for National Statistics (ONS) (@ONS) April 11, 2022 52 minutes ago02:29
Introduction: UK grows slower than expected in February
Good morning and welcome to our ongoing coverage of business, the global economy and financial markets.
UK economic growth slowed more-than-expected in February, with UK industrial production falling as manufacturers struggled to source parts.
UK GDP rose just 0.1% in February, New figures from the Office for National Statistics show that activity in Covid-19 test and trace and vaccination rollout programs is declining.
That followed January’s 0.8% growth, below the 0.3% growth in February that economists had expected. This means the economy is around 1.5% larger than two years ago, just before the first lockdowns in the UK.
The ONS reports that the service sector was the largest contributor to growth in February, up 0.2% after England’s ‘Plan B’ restrictions were lifted at the end of January.
This was spurred on by tourism-related industries after coronavirus testing was scrapped on double-vaccinated travelers arriving in the UK from mid-February, in time for the mid-term holidays.
The “travel agencies, tour operators and other reservation services” sector saw a 33% increase in activity and the accommodation industry grew by 23%.
The UK economy grew just 0.1% in February, below expectations
It was mainly driven by inbound inbound and outbound tourism
Although @ONS now says monthly GDP is 1.5% above pre-pandemic February 2020 levels
— Darren McCaffrey (@darrenmccaffrey) April 11, 2022
However, human health activity fell (down 5.1%), driven by a drop in NHS Test and Trace activity and vaccination activity after a busy December and January.
That production The sector suffered a 0.6% decline in activity during construction down 0.1%.
Manufacturing was the main driver of negative growth in the manufacturing sector, falling 0.4% in February 2022, according to the ONS.
Auto production, suffering from the shortage of semiconductors, saw production fall by more than 5%.
Declines of 5.4% in manufacturing of transportation equipment (driven solely by the decline in automobile manufacturing), 4.3% in manufacturing of computers, electronic and optical products and 5.0% in manufacturing of chemicals and chemical products became modest pharmaceutical products and pharmaceutical preparations, offset by the manufacture of basic materials, which recorded a growth of 9.8%.
Monthly GDP is 1.5% above the pre-Covid-19 level of February 2020.
Services are now 2.1% above pre-coronavirus levels, while construction is 1.1% above and manufacturing 1.9% below, the ONS reports.
Also this morning, Elon Musk decided not to join Twitter’s board of directors, in a reversal just days after becoming its largest shareholder.
Twitter executive Parag Agrawal says he believes the moves are for the best.
We have and always will value the input of our shareholders, whether they are on our board of directors or not. Elon is our largest shareholder and we remain open to their contributions.”
There will be distractions, but our goals and priorities remain the same.
Musk tweeted a hand-to-mouth emoji following Agrawal’s announcement.
He has outlined several ways Twitter could (in his view) improve services, including adding an edit button to tweets and criticizing its moderation policies.
European stock markets on track to open lower:
The agenda
- 7am BST: UK GDP and trade report for February
- 1pm BST: Monthly NIESR GDP tracker for March
- 2pm BST: Russian foreign trade data for February
- 2pm BST: Bank of Israel rate decision
Updated 4/3 EDT
Comments are closed.